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IRS Division for Large and Midsize Businesses Begins Operations

Since its overhaul was mandated by Congress in the
IRS Restructuring and Reform Act of 1998, the IRS has made
considerable progress putting the various parts of its reorganization
plan into place. A major component of the IRS restructuring was its
split into four major operating divisions, replacing the regional
office structure (see “Modernization Update: New IRS Up and Running,”
JofA, Mar.00, page 72). The first of these to begin
operations was the Tax Exempt and Government Entities Division in
December 1999. The next one the IRS rolled out was the Large and
Mid-Size Business Division (LMSB).

Commissioner Larry Langdon directs the LMSB, which will serve
210,000 corporations and partnerships with at least $5 million in
assets. According to the IRS, these businesses pay $712 billion
annually in taxes. The IRS hopes organizing the LMSB into five
specific industry groups will allow the agency to build greater
expertise and improve service. Those sections are as follows.

Communications, Technology and Media. This section,
headquartered in the San Francisco Bay area, is responsible for
approximately 500 large businesses and 13,600 midsize businesses.
It covers telecommunications, software and hardware development,
broadcasting, publishing, sports franchises, hotels, gaming and
other entertainment and recreational services.

Financial Services and Healthcare. Headquartered in
Manhattan, this section serves 5,000 large businesses and 41,600
midsize businesses. It covers industries such as commercial
banking, savings and loans, securities and other financial
services, health care and insurance.

Heavy Manufacturing, Construction and Transportation. Tax
law specialists in the areas of air and ground transportation, the
aerospace and automotive industries, shipping, construction and
real estate staff this section, which is headquartered in central
New Jersey. Initially, it will serve nearly 103,000
taxpayers—1,500 of which are large businesses. The highly
competitive and cyclical global environment in which these
industries operate is extremely sensitive to fluctuations in
interest rates.

Natural Resources. Headquartered in Houston, this section
serves 1,300 large businesses and 16,100 midsize businesses
nationwide. It covers industries such as petroleum, mining, forest
products, utilities and chemical engineering. The IRS expects
significant growth in these industries from overseas activities
and mergers among utilities, giving rise to very complex tax
issues.

Retailers, Food and Pharmaceuticals. This industry group,
headquartered in Chicago, serves 1,000 large businesses and 28,200
midsize businesses. It includes food and beverage, retailing,
pharmaceutical, agricultural commodities and farm industries—all
of which have similar financial reporting and growth patterns.

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